Paul Pilkauskas, Senior Commodity Specialist, ESCR, FAO
An important part of the mandate of the Commodities and Trade Division (ESC) of FAO is to identify the problems affecting commodity trade and propose solutions to address them, preferably through international action. ESCR (the Raw Materials, Tropical and Horticultural Products Service) became involved in social, environmental and labour issues as these continued to arise in the analytical work on trade and economic problems related to bananas and other commodities for which it is responsible. This led to contacts with many of the NGOs operating social and environmental certification schemes. FAO organized a first meeting with these NGOs, small farmers, auditors and environmental experts in March 2000. A Working Group on Responsible Horticultural Production and Trade was formed in 2000 and included participants from IFOAM, RA/SAN, FLO, SAI, other NGOs and the ILO. A few selected small-scale banana growers and experts in environmental and social auditing also participated. Since then, three Expert Meetings have been held and FAO has established an Internet portal where relevant studies and links to organizations working to improve social and environmental conditions in agricultural production and trade can be found[2].
FAO-ESCR has produced several technical studies and information publications on certification. These include: a small brochure targeted at wholesale and retail buyers of bananas, explaining the differences between fair-trade, organic, SAI and rainforest alliance certified fruits; an extension manual aimed at producer associations and exporters in Central America, presenting the main opportunities and constraints of the voluntary certification programmes and describing the import regulations of main export markets; two cost-benefit analyses on certified citrus in Spain and in Costa Rica; and recently, a technical paper on environmental and social standards, certification and labelling for cash crops. FAO-ESCR has furthermore given technical support to the SASA project.
ESCR has actively supported the FAO organic agriculture programme. The Service is currently chairing the Interdepartmental Working Group on Organic Agriculture. A publication on world markets for organic fruits and vegetables has been widely disseminated in three languages and ESCR has organized regional conferences on organic trade opportunities in Trinidad and Tobago and in Thailand[3]. In July 2004, FAO will hold a conference on organic seeds, while there is ongoing work regarding organic pastures, crops, post harvest treatments, trade issues and more. Beyond the agricultural sector, FAO is also involved in certification issues in the area of fisheries and forestry.
Pat Mallet, ISEAL
The ISEAL alliance is the collaboration of eight international social and environmental standard setting and accreditation organizations, which represents most of the NGO driven social and environmental certification initiatives worldwide. The reason for the collaboration is that the members believe it is important to differentiate social and environmental standards and labels on the basis of quality and credibility, in order to ensure impact on the ground. The main objectives of ISEAL are to improve the methods of standard setting and conformity assessment as a means to improve both the credibility and the accessibility of certification.
Together with health and safety, it is hoped that soon social and environmental sustainability will be considered a core component. One example of how industry is starting to prepare for this is illustrated by the collaboration between Rainforest Alliance and Kraft, which has brought large volumes of certified coffee into the mainstream market to be sold under its own product line. In this pre-competitive stage where the standard is not used as a marketing tool, the content of the standard does not matter so much. However, once the standard enters the market and it becomes a competitive tool, it affects the other players and can confuse consumers if it results in an overlap of standards. By creating a baseline of objective criteria, ISEAL would like to see that credible certification organizations differentiate themselves in the market place and have positive impacts on the ground.
Sasha Courville, Australian National University/SASA project
The text below was produced by the Secretariat of the Social Accountability in Sustainable Agriculture (SASA) project[4]. It summarizes the full report on Opportunities for Convergence and Complementarity among the four SASA initiatives, outlining draft recommendations for future collaboration. Based on the field research conducted through the SASA project and evidence of the commitment of participants to seek to drive toward stronger social standards, improved cost-effectiveness and service delivery to clients as well as improved social, environmental and economic outcomes, the SASA steering committee identified a series of activities that could strengthen the work of all participating initiatives. This summary provides an overview of these draft recommendations that the SASA steering committee will present to their respective boards and other key constituents for discussion and consideration.
Over the last decade, there has been increasing activity in the area of corporate social and environmental responsibility, fuelled by increasing trade liberalization and economic globalization juxtaposed with growing global concern about food safety, environmental protection as well as farmer and worker rights. In this climate, new, often commercially driven, initiatives with particular brands and claims have emerged to meet market demands. With the proliferation of sustainability initiatives, producers are being asked to jump through more and more hoops and "consumers will not be able to differentiate between sustainability light and serious initiatives."[5] Mission-driven initiatives prioritize social and environmental sustainability starting from the perspective that certification is not an end in itself but a tool for promoting higher sustainability goals and outcomes. These groups will be much better able to engage with the increasing numbers of commercially oriented certification systems if they form strategic alliances with other mission-driven systems, enabling them to build economies of scale through sharing information and other forms of collaboration.
Given the high profile that voluntary social and environmental initiatives enjoy at the moment within the development community, and with governments increasingly interested in examining the potential of such initiatives as compliance incentives, there are significant opportunities for coordinated high quality initiatives to influence the sustainability agenda. For example, clear quality benchmarks with respect to social and environmental certification systems are understood to be important by many stakeholders, if such initiatives are to play a significant role in shaping sustainable production, trade and consumption patterns. However, just as there are opportunities for influence, there are also potential threats of overregulation through multiple parallel regulatory regimes, as can be seen in the regulation of organic agriculture and trade worldwide.
The ideas summarised in this section are based on research conducted by the SASA project from 2002 to 2004. In order to address the challenges highlighted above, this summary and the full SASA report on Recommendations for Convergence and Complementarity propose the development of a Sustainable Agriculture Coordination Platform, under the umbrella of the ISEAL Alliance. This platform would provide a framework for a wide range of bilateral and multilateral coordination programmes and activities, seeking out a wider range of stakeholder participation and increased convergence among mission-driven initiatives. Efforts will initially focus on producer-oriented forms of coordination, including the development of a common reference point for certification information and services (website), the facilitation of technical extension, the collection of existing self-evaluation tools and the further development of these, and the provision of integrated audits in cases of multiple certifications. Further research in terms of market needs, potential and positioning is required prior to the development of market-oriented coordination programmes and activities and this is also incorporated into the proposed implementation plan.
The coordination platform proposed is not specific to agriculture nor would it be exclusive to the SASA partner initiatives. The agricultural sector has been the focus of the SASA project given the common sectoral interest on the part of FLO, SAI, SAN and IFOAM. As such it makes sense to begin testing coordination activities in the agricultural sector with the participating four SASA initiatives. However, the coordination framework itself and its objectives are not unique to agriculture; given this, its scope could be expanded over time to include other sectors, such as fisheries and forestry, among other options. In order to differentiate between other coordination platforms within the ISEAL Alliance, the term Sustainable Agriculture Coordination Platform is the initial working title.
In terms of which initiatives would be able to participate in the Sustainable Agriculture Coordination Platform, it is suggested that full partnership would be open to any ISEAL member - with ISEAL membership open to any initiative meeting ISEAL’s membership criteria. In addition, other forms of participation could be envisaged with other corporate sustainability initiatives apart from full partnership. For example, where consumer interest and market realities dictate that ISEAL member initiative clients (producers) need to demonstrate compliance to another initiative’s standards, cooperation at the level of inspection and certification may be envisaged with the aim of reducing the certification burden on producers, even if that initiative does not fulfil ISEAL requirements. The terms of any relationship between the coordination platform and other initiatives would need to be developed on a case-by-case basis.
Through the SASA project, the representatives of the four participating organizations have been able to learn more about each other’s initiatives and to identify a number of shared goals and values including a shared commitment to better serve their respective clients and constituencies, to maintain and protect high value systems and to work toward social, environmental and economic sustainability.
Underpinned by these shared values, the objectives of the proposed Sustainable Agriculture Coordination Platform include the following:
1) Building on synergies leading to improvements in service delivery;
2) Increasing cost effectiveness of participating initiatives through coordination;
3) Achieving greater positive social, environmental and economic change; and
4) Strengthening mission-driven, high quality international verification systems.
Cooperation can help the initiatives to improve service delivery through sharing their knowledge and expertise in distinct but overlapping fields leading to better auditor training, better auditing and better standards-setting, just to name a few examples.
As the SASA initiatives are each involved in setting up and maintaining many of the same types of systems and in implementing similar baseline activities, coordination can help to avoid continuously reinventing the wheel. Where appropriate, resources can be pooled together for increased cost effectiveness in achieving common goals. This can be seen in integrated audits, through coordination in auditor training or the development of common producer support tools. Coordination will also lead to costs savings for the users of the participating certification systems through reduced transaction costs in getting clear comparative information about certification options, in improving access to training and support tools and in reducing duplications in multiple certifications.
Through improved service delivery and increased cost-effectiveness, the participating initiatives will be better able to promote positive social, environmental and economic change on the ground. This coordination will also enable members’ diverse stakeholders to better understand and influence a broader range of social and environmental programmes. Achievement of the previous objectives will serve to address the fourth: strengthening mission-driven, high quality international verification systems. Within the coordination platform, each initiative will be supported in promoting and strengthening its own profile while also enabling the groups to consolidate support for the rigorous benchmarks common to all participating initiatives.
(i) Structure of the Sustainable Agriculture Coordination Platform
In order to achieve the objectives identified above, a Sustainable Agriculture Coordination Platform that would provide a framework for a range of coordination activities between the SASA organizations is needed. As the focus is on facilitating coordination among and between the initiatives, the supporting framework needs to reflect this. Instead of creating a large super-structure, smart ways of cooperation that make full use of the existing capacities and strengths within each organization and its affiliates are needed. The platform would provide a framework under which both bilateral and multilateral coordination activities of its member initiatives could be placed.
The Sustainable Agriculture Coordination Platform would need a small but multi-functional centralised node, linked to the ISEAL Alliance and charged with overall coordination and implementation of the coordination programmes and activities. In addition to this, a contact person within each initiative would need to work closely with the central platform in providing organization specific information and tools that would then be integrated into the wider coordination framework. Regional nodes of coordination would facilitate coordination between local certification bodies and other affiliated members of the participating international initiatives, to compile information, coordinate producer support and auditor training courses as well as support integrated audits.
The Sustainable Agriculture Coordination Platform would include both external coordination programmes and activities for use by clients of the participating certification systems as well as back-office coordination functions that would be required to support the external user services. In order to orient producers and consumers, the Platform would be a common reference point for certification information and services - and how to work towards more fully sustainable production practices. This common reference point would serve as a virtual resource centre for social and environmental certification information, tools and services of the participating initiatives. Resources available would range from general comparative information about the participating initiatives through to producer support tools and information about certification packages available.
(ii) Producer-Oriented, Market-Oriented and Strategic Coordination
There are three main types of programmes and activities that would be supported by the coordination platform: producer-oriented, market-oriented and strategic coordination. Producer-oriented coordination was prioritised from the start of the project, given the obvious need for such coordination articulated by producers and other stakeholders of the four initiatives, and building on the possibilities to improve service delivery and reduce costs. Market-oriented coordination will seek to build on producer-oriented coordination to strengthen the market for all of the participating initiatives through the possibility to offer coordinated packages and services to supply chain actors and retailer clients. A third type of coordination is more internal to the participating initiatives and focuses on strategic forms of cooperation with key international stakeholders - continually seeking to improve the quality of the social and environmental standards and related auditing and implementation practices. It should be noted that all three streams are inter-related and to some extent inter-dependent.
Stream 1: Producer-Oriented Coordination Recommendations
The first stream includes an implementation plan to develop and put in place programmes and activities with respect to producer-oriented coordination within a three-year period. This includes the following producer-oriented and back-office activities:
Development of Common Reference Point platform for producer-oriented information and coordination services (website development, including compilation of comparative information in a user-friendly format);
Case studies illustrating costs and benefits of partner certifications (research project with results to be included in Common Reference Point);
Coordination in auditor training (including opening up existing training courses to partner organization auditors, advanced integrated auditor training course, issue-specific training modules);
Development of producer-oriented support tools including training materials on generic topics (i.e. how to address corrective action requests, ICS implementation, implementing health and safety requirements) and self-assessment tools for producers;
Facilitation of auditors exchange (and consultants) for technical assistance (whereby auditors of one system, having been trained in partner systems, can act as technical assistance providers to help a producer group move to compliance to the partner’s certification standards);
Facilitation of integrated audits (includes protocols for information exchange between certification bodies, case studies, dissemination of integrated audit example templates and procedures, integrated audit trials, and integrated auditor database);
Strengthening of the standards, guidance and verification methodologies of the participating initiatives, seeking to consolidate support for more rigorous standards. Implementation of the SASA project recommendations on standards setting and verification will strengthen all the initiatives through best practice learning of partner organizations and will allow for greater influence in shaping the future of social standards and verification approaches in agriculture.
Stream 2: Market-Oriented and Supply Chain Coordination Recommendations
While it is clear from the results of the SASA project that producer-oriented coordination activities will have concrete benefits to users of the participating certification systems and to the initiatives themselves, more information is needed about user interest in market-oriented and supply-chain coordination between the participating initiatives and about whether the market benefits of coordination will provide an economic return on the significant investments required. Given this, a first step for Stream 2 is the execution of a market research project that would seek to identify the client needs and market potential for coordinated services to supply chain and retailer users.
While mapping of supply chain coordination was initiated by the SASA project through the final audit exercise on cotton production, processing and trade, further work is needed to identify practical possibilities for bilateral and multilateral cooperation amongst partner organizations with respect to social, economic and environmental risk management and traceability in the supply chain. A further essential component of the research project is an examination of how the participating initiatives relate to each other in terms of market positioning and what role the coordination platform would have in this. This would include identifying how to communicate the message behind coordination to supply chain and retailer clients.
Any future market-oriented coordination programmes and activities would focus on general education and promotional activities of the members participating in the Sustainable Agriculture Coordination Platform and would not engage in direct marketing of labels and certification systems. However, where a buyer or retailer client might request this activity, the market research project would consider such scenarios, taking into account the initiatives´ different levels of involvement in and approach to labels and certification.
Stream 3: Strategic Cooperation Recommendations
Given the current proliferation of corporate social and environmental responsibility programmes including certification initiatives, it is very difficult for key international stakeholders to identify the initiatives with strong quality benchmarks. Furthermore, dealing with each initiative separately is not possible given the numbers of initiatives and the time involvement required. Demonstrating close cooperation at the standards-setting and certification levels through a common coordination platform will help consolidate and facilitate requests for input from key stakeholders such as international trade unions, the International Labour Organization (ILO) as well as national and regional governments and intergovernmental initiatives. Coordination among the participating initiatives across a number of levels of activity would also help to place them in a better position to collectively engage with other corporate social and environmental responsibility initiatives. Many of the tools and frameworks developed for coordination among and between the participating member initiatives could also be used to conceptualize relationships with other initiatives. As strategic cooperation is a core activity of the ISEAL Alliance, the coordination platform would help to support ISEAL work in this area.
Richard Perkins, World Wildlife Foundation (WWF), The global environmental network
The mission of the World Wildlife Foundation is three fold; to conserve biodiversity, to reduce the waste of natural resources and to reduce pollution. Perhaps most well-known for its role in conserving biodiversity, the WWF considers the other two areas to be equally important. It is therefore very relevant to talk about the impact of agriculture which has a major effect on the environment and society and the potential role of voluntary standards and certification to providing such an awareness to consumers.
At present, however, the certified sector is small (reaching only about 4 percent of the total market) and highly fragmented with too many ecolabels. The majority are not interested in certified products; eco-labelled products are generally perceived as being too expensive and many doubt whether producers receive a fair share of the premium. Instead, WWF experience is that while consumers are highly concerned about residues and product safety, they will tend to act only on urgent problems where there is a very clear connection between their actions and an environmental outcome.
There are also a number of institutional challenges in the agricultural sector that need to be dealt with as well. One of these relates to the concentration and amalgamation of buyers of agriculture products and the other is the World Trade Organization that does not have the competence or interest necessary to deal with social and environmental issues. Neither the major buyers nor the WTO should be able to dictate the appropriate means of dealing with social and environmental problems.
To address the above challenges, voluntary certification needs to become more mainstream and clearer linkages should be created between consumers and their impact on the environment. Consequently, there are four important things that need to be done:
1) Target the major buyers of agricultural products to inform them of the benefits of these products. The concentration of buyers represents a communication opportunity (there are only 300-500 in total) so changes made in the other 95 percent of the market affected by these buyers represents an opportunity for dramatic change.
2) Focus on the major impacts that producing each commodity has on the environment. Agriculture affects the global environment in four major ways: water use (70 percent of freshwater withdrawals are for agriculture); soil and air pollution; conversion and simplification of habitats (resulting in the annual loss of forest the size of Nicaragua or Greece) and soil degradation though soil erosion (40 percent of the world agriculture land is degrading). Long laundry lists of impacts are not strategic enough, so only select 2-5 better management practices that will address these impacts.
3) Produce quantitative and measurable results relating better practices in the production of agricultural commodities to the reduction of the major environmental impacts. Show quantitative progress against baseline data on water use, effluents, toxicity of all inputs, soil health and vitality, soil organic matter, impacts on biodiversity.
4) Certifiers should get together to compare standards in a transparent way and to support a credible alternative to WTO regulation of eco-labels.
Some participants argued that any organization setting a standard should assess its possible impacts on the environment and society. The question of who should be responsible for setting standards was debated. According to the speaker of WWF, it is important to reach consensus on any new standard among the key stakeholders, which may consist of about 6 to 10 private sector players, 5 to 6 NGOs and 5 to 6 producer organizations for each commodity.
It was noted that although environmental and social concerns were of equal importance, the latter were largely neglected in the presentation. Since social issues are not the core expertise of the WWF, they were left out but the same process for impact assessment could be applied as well. It should include players such as trade unions and social representatives instead. Similarly, methods for assessing environmental standards could learn from processes used in the SASA project to improve the accessibility and impact of environmental standards.
A comment was made about the growing consumer interest in food safety and consumer health issues in the United States, while consumer interest in environmental problems seems to be lower. The presenter answered that consumers in the United Kingdom are sensitive to environmental problems. US consumers may become more sensitive to these problems if they are made aware of the impacts of the heavy use of agrochemicals in agriculture.
It was asked whether WWF would be interested in doing studies on the impact of voluntary certification. The presenter answered that as an environmental movement, the WWF should definitely be involved in measuring impacts, but this work would need to be done in collaboration with other organizations. NGOs have limited resources, whereas large food manufacturing companies could afford to fund impact studies. Nevertheless, the importance of these studies was recognized by the WWF and the organization was interested in contributing to such work.
Maria Gardfjell, Coop Sweden, marketing department
The mission of the Coop is to safeguard the ecological, social and household economic interests, as it is a consumer-owned retailer. One way to do this is through the promotion of organic agriculture, an involvement lasting for over 20 years and which has continued to grow steadily. Coop Sweden has a market share of about 20 percent in Sweden and about respectively 9 percent of foods in the Coop Konsum supermarkets, is organic and 4 percent in the Coop Forum hypermarkets. Coop Sweden uses the KRAV label, a well-known national seal for its organic products, as well as its own brand ‘Änglamark’ that is based on distinct values and is the leading brand for organic products in Sweden. Other ecolabels such as FSC, the Nordic Swan, the Good Environmental Choice and the fairtrade label Rättvisemärkt are used on products and promoted by Coop. However, the fair-trade movement has been much less successful due to lack of collaboration and the limited range of fair-trade products available.
The success of eco-labels in Sweden is largely attributed to the collaboration among retailers and the environmental and organic movements. Demands from consumers also forced Coop to develop policies. First, collective retailer initiatives with marketing strategies geared towards the average consumer enabled them to capture a high market share. They worked on the principle that it was better to have many consumers buy a few organic products than to have a few consumers buy all organic.
Coop Sweden now engages the consumer and provides feedback on their purchases by indicating on the receipt if the items have an eco-label. The retailer also presents to the consumers an annual report on environmental and animal ethics achievement based on sales of certified products.
Strong campaigns on animal welfare issues seem to have achieved permanent consumption changes among many consumers. Coop Sweden is interested in supporting organic agriculture further, in conjunction with the support and collaboration of other retailers. However, since the majority of retailers are conventional retailers, as Coop is, there could be a risk that retailers are not particularly interested in social and environmental issues. It is therefore important to find mechanisms to simulate their interest. Coop Sweden believes that promotion and development of the organic sector can help do this, as it will contribute to the sustainable development of the retail business as a whole. In practical terms, this long-term strategy for Coop Sweden aims to have all food products available as organic, to have all organic products certified and if possible, multi-certified (both organic and fair-trade labels). For instance, in the future, Coop intends to have 100 percent of the milk sold in the store labelled organic and sold at the same price as conventional milk. For other commodities like organic eggs, which currently make up 33 percent of the total sales, the economy of organic egg producers needs to be improved and new markets developed before sales are expected to increase.
It is the experience of Coop Sweden that consumers are capable of knowing and differentiating between many different types of certification and brands. To help facilitate this understanding, however, producers and retailers need to communicate information about social and environmental issues more effectively. Certification programmes need to support and collaborate with (instead of competing against) retailers and their initiatives to avoid consumer confusion.
Considering the success of the Swedish example, it was asked how Coop Sweden would initiate a similar communication campaign and collaboration with retailers in the US market, which is very different from the Swedish market. The importance of using the best marketing tools available was stressed. However, there was no clear answer as to how this experience could be reproduced in the US market.
Whether consumers can actually differentiate between several labels without being overwhelmed and confused by them was further discussed. It was agreed that consumer education and understanding of labels vary according to countries and depend on factors like the variety of labels on the market and the degree of understanding about certified products. It is always a challenge to make the labelling systems easy to understand for the consumer, and it may be more effective to only have one or a few labels on the market. The most important requisite is that the certification labels are trustworthy, that the certifier is accredited and that consumer information about the labels are available for consumers and producers.
A meeting with retailers at the next Biofach fair was suggested to discuss how they could jointly stimulate the organic market. A Trade Forum within IFOAM has already been initiated wherein the private sector is sharing ideas on how to expand the organic sector. According to Coop Sweden, the best way to support organic producers is to help them sell their products and to reach consumers. As retailers, they see themselves as the link between the two and thus are well positioned to help farmers reach the customers. Effective marketing campaigns will in turn generate increased interest among producers to convert more of their lands to organic agriculture. Therefore, marketing campaigns reach both producers and consumers.
Louise Ousted Olsen, EURO-COOP
Representing over 3 000 local or regional consumer cooperatives, EURO COOP is a European based organization with over 19 million consumer members in the EU and 2 million in the associated countries of Central and Eastern Europe. It is involved in the promotion of social and environmental production-Fair Trade in particular-through the mobilization of financial and political support among its consumer members and EU institutions and member states. Fair Trade labelled goods guarantee farmers and workers reasonable remuneration for their work, the right to form a union, proper employment contracts, and no child labour.
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EURO COOP facts about Fair Trade:
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With its consumers, EURO COOP has engaged in a number of education and information campaigns designed to provide the buyer with the information necessary to make more informed buying decisions. Promotional materials such as brochures, member magazines, websites training programmes and workshops and other events are designed toward educating the consumer about sustainable production and trading practices in an effort to promote the sustainable development of communities. There are a number of products now available as the result of this successful campaign, ranging from traditional products like coffee, tea and cocoa and honey and chocolate to more unconventional products like wine, footballs, musical instruments, toys and games.
However, since these initiatives will only go as far as the political and economic policies allow, EURO COOP also works with EU institutions and member states and is presently working to establish a platform for regular dialogue with EU bodies to formalize the lines of communication. The goals of this interaction include: the development of better coordination and coherence among EU policies; education and awareness-raising programmes among consumers; more research into providing market access to Fair Trade producers, and into providing technical assistance for producers including capacity building and training. Private organizations and companies buying or selling Fair Trade could also help to provide pre-financing and investment credits to their partners in the developing countries.
From the efforts in engaging consumers so far, the EURO COOP has developed its range of Fair Trade products to 31 and has helped push the transition of Fair Trade into the mainstream. For instance, its UK outlet was responsible for the first Fair Trade banana in 2000 and wine in 2001 (although it cannot carry the Fair Trade mark due to lack of established international criteria); adding another six new lines in 2002 (white wine, white chocolate, mangoes, cake, instant coffee and pineapples). In addition, it helped support the conversion of all its block chocolate to Fair Trade with the biggest ever Fair Trade initiative that they had ever undertaken. Despite the successes, one of the major challenges is to push socially responsible production and trade into the mainstream without jeopardizing the primary aims of supporting social, economic and democratic development in less-developed countries.
Summary of discussions
A discussion on how to effectively build alliances and improve collaboration along the food chain was initiated. It then focused on the more concrete question of how to share or spread the cost of certification along the supply chain, as producers currently carry the main burden of these costs whether they receive a price premium or not.
Coop Sweden mentioned that in their experience the cost of certification is actually paid by the consumers, not by the producers. According to Coop, one basic rule is that the certification cost should not be more than 2 percent of the product price. The food processing industry also pays to be certified. It is not only the farmer that has to pay for certification, as in Sweden the food industry covers a much larger part of this cost compared to the producer. Finally, it was noted that it is important that the organic movement and certifiers work more together to reduce the cost of certification.
A producer mentioned that food quality is not always good and farmers should take on much more responsibility for the quality of the final product. According to him, producers often give priority to quantity at the expense of quality. Farmers should take a critical look at their methods of production.
Some reports indicate that retailers have higher margins on certified products compared to the sales of conventional products. If this is common practice, retailers should take on a greater share of these costs. Coop Sweden claims to be the cheapest organic food store in Europe and that it has the same margins for organic and conventional products. This is also the policy of its two main competitors in the Swedish market. However, another example was given, where a Ugandan farmer received a fair-trade price premium of 15 percent, while consumers in the Netherlands were paying a 35 percent premium on the same product.
The experience of a group of small holders in Africa was that they were aiming at keeping certification costs at around 2 percent of the product value, but this did not include all the internal costs of certification. The certification of small holders will likely imply substantial changes in their management systems. However, producers can often reduce other costs by making improvements in the management system. A case study of implementing EUREPGAP showed that added value emerged when the management system was improved.
Costs need to be shared on both the consumer and the producer sides. However, a challenge is to increase the local auditing capacity, as this is what can reduce the cost of certification. Audits done by local inspectors in developing countries are much cheaper than those done by foreign inspectors. However, currently local auditors are not trained enough. Another interesting option to lower the cost of certification is setting up multiple certification services. When a local auditor can receive training and is accredited for several certifications, there is a real scope for reducing the costs. It will take time and there needs to be commitment by the certification bodies to do it. A further advantage of using local certifiers is that they are closer to the farmers, often better in communicating and more aware of the local issues.
From the perspective of producers, multiple certification services would not only cut costs, they would also be practical and save time for the producer by limiting the administrative work load and the number of auditing processes. Some farmers in developing countries presently need up to five different certificates to get access to the various developed markets. This is becoming an unbearable burden, especially for small producers.
Removing the middle men from the supply chain has sometimes proved a good way to ensure that more profit accrues to the producer. However, their functions cannot always be taken over by farmer groups. For coffee it can be profitable to sell directly to roasters. This may be possible with small roasters but not to the same extent with the multinational coffee buyers, as they demand large quantities of consistent quality.
A participant from the Rainforest Alliance argued that certification often encourages companies to comply with regulations. Producers may, for many reasons, not comply with all the regulations. When they start making improvements in their management system, they often reduce costs, although there are few studies that document this in a systematic way. The experience of the Rainforest Alliance is that many producers feel that obtaining certification is a big up-front cost, but that they actually save money in the long run.
A large-scale retailer mentioned that it is important to focus on what the consumers want and that it is equally important that the producers are familiar with this demand. This is often a challenge in a North-South collaboration; however, what is needed is to find economically sustainable solutions for poor producers in developing countries that are oriented towards the consumers.
Finally, the representatives from Chiquita and Dole were asked to share their experiences about the costs and benefits associated with the implementation of the Rainforest Alliance, ISO14001 and the SA-8000 standards. For Chiquita the implementation of the Rainforest Alliance standard had been an investment which was beginning to show financial benefits in terms of saving on the recycling of materials, better agricultural practices and improved heath and safety that were reducing the cost of workers accidents. Dole confirmed this finding based on their own experience of implementing the ISO14001 standard. The company has saved millions of dollars over the last seven years by using less pesticides and improving worker health and safety, as accidents have been reduced by 90 percent since the implementation. It was still very early to say whether the implementation of the SA-8000 standard was a good investment for the company. However, their experience from the Philippines was that SA-8000 was helping to reduce the accident rates significantly.
| [2] See http://www.fao.org/es/ESC/en/20953/22218/highlight_44152en.html [3] See http://www.fao.org/es/ESC/en/20953/21020/highlight_30476en.html [4] For more information on the SASA project, see http://www.isealalliance.org/sasa/ [5] Giovannucci, Daniele with Freek Jan Koekoek (2003). The State of Sustainable coffee: A study of twelve major markets. P. 67. |
